Sent: Thursday, December 26, 2013 2:16 PMSubject: Costs to reclaim the land after abandonment

So how much does it cost to plug an abandoned oil or gas well and to reclaim the land? Of course, there is no quick and easy answer because there is plugging and there is plugging and what does one mean by reclaiming. This issue of bubbles takes a quick, elementary look at this issue.

First plugging: In the recent past, plugging might have been satisfied by dropping a treated wooden cylinder into the top of the well. As used telephone poles met the treating and dimensional requirements, they were used according to some sources. As to reclaiming, that could simply mean removing equipment, but might also include removal of pads, pipes, mud and water pits, roads, structures, and tanks as well as replanting of a re-graded surface; a wide range indeed.

What is out there on the web? The headlines are unsettling:

“Hundreds of abandoned drilling wells dot eastern Wyoming like sagebrush, vestiges of a natural gas boom that has been drying up in recent years as prices have plummeted.”

And this story’s lead is also disturbing:

“The companies that once operated the wells have all but vanished into the prairie, many seeking bankruptcy protection and unable to pay the cost of reclaiming the land they leased. “

Another estimate, for just the reclaiming costs, based on actual costs from 800 wells in New Mexico, estimate that reclaiming the surface of an abandoned well site costs between $16,500.00 to $50,000.00.

2. New York regulations are discussed in a 26 page document at http://www.dec.ny.gov/docs/materials_minerals_pdf/dgeisv1ch11.pdf. The opening states “State law requires operators of most oil, gas and solution mining wells in New York State to maintain financial security with the Department to ensure that the wells are properly plugged and abandoned after their economic life is over. Financial security requirements were substantially increased in 1985 to more closely match the actual costs of plugging operations.”

2.Specific details about plugging etc. including some sketches are offered.

More digging should be undertaken, but the message seems to be: 1) Not all firms will be in a position to properly close down a drilling and production operations; 2) Requiring bonding, while a good idea, too often results in inadequate funds; 3) Taxing the industry to establish a fund to cover the expenses ultimately redounding to the state may well be prudent; and 4) State regulations as to definitions, what constitutes proper plugging and land reclamation need to be in place before drilling is undertaken.